A Chapter 13 plan details the treatment of debts, liens, and secured assets and liabilities owned or owed by debtor. The trustee distributes funds to creditors in accordance with the terms of the plan.
Of the three claims, priority, secured and unsecured, the repayment plan should pay off priority claims in full unless a specific priority creditor opts for different treatment of the claim. Priority claims are those claims that take priority over the rest. Generally, of the three claims, priority claims have a special status in bankruptcy law. Priority claims are not dischargeable or cannot be reduced under Chapter 7 bankruptcy. Priority claims involving individual debtors include:
- Child Support and spousal support
- Fees and administrative costs
- Income taxes that are recent.
Priority claims are to be paid off completely before lower claims are paid.
